tv [untitled] June 28, 2011 6:30am-7:00am PDT
employees? >> with the exception of the deputy sheriffs. they had the same instructions going forward as the new employees. we have -- this is an area where we have had a change since the original introduction. it was probably improperly known as divesting retirements. it is for those who have been here at least five years and do not work long enough to receive a service return the. initially we looked at creating a deferred service retirement for those in -- for those individuals in lieu of a service retirement. supervisor elsbernd: use me as an example. next year, i will be a city employee, i will have worked for the city for 12 years, and i
will be 36. >> he has not achieved age 50 or 60, therefore you do have the option to have what we call a vested retirement. it is really an annuity. they calculate the employee contribution. the city had made the contribution in some cases through collective bargaining for part-time, as i think in your case. that is doubled, and that becomes an annuity you can take out the bank that is an unusually rich benefit. supervisor elsbernd: does anybody else have that in a public agency? >> nobody else that we know of in a public agency. there are legitimate concerns as far as people who may not have an opportunity to get a career benefit through no fault of their run.
we initially put in a deferred service retirement. it would allow you to start drawing at age 60. that would not achieve the economies we had hoped for, so we had agreed with our labor partners to an amendment that would be a half match. it is a 1% match, and those are guaranteed savings, and all more important given our employee contributions. for new employees, it would only be paid -- supervisor elsbernd: i want to reinforce what you just said. this is new employees on the supplemental. >> i am still on the element of the proposal that only applies to new employees.
not only have the they retired, but they are not in the cities service. for those individuals, the two elements that applied to them, the fund is required to be paid and the supplemental would not be permanent. as you know, supervisor, from the retirement board, the supplemental is paid with the earnings better in excess of those expected. the mechanism that provides for repayment is independent of the status of the fund. even though right now we're climbing out of a really deep hole, given the market's losses of 2008, and yet the supplemental was paid because
the fund achieve higher than the 7.5% interest that was expected. this could be a change going forward. currently, the supplemental cola is build and -- built-in. when i retire in the future sunday, i would receive the supplemental cola. even when the city was not fully funded, even when there were no excess earnings, i would continue to get that extra money. it is an expression of the fund having excess earnings that they did not use. going forward for new hires, it would not be permanent. it would continue to be paid until there were no excess earnings and it would be paid again in the future when there
are excess earnings. supervisor elsbernd: let me just preface a question i will have when it gets to your return, and maybe, perhaps j.. defining these changes are around the supplemental cola are difficult. if you could prepare an answer, i would appreciate it. >> what i just described reflect long-term savings, because these apply to people who were not even on the city's payroll. it is the typical turnover of 5% @ year. so, the element most people are referring to when they talk about how much does it save in the next 10 years, the floating contribution, the employee contribution. the employee contribution is set
by charter for virtually all city employees at 7.5%. it varies. it goes up, it goes down, depending on what is in the plan, the demographics, but also, power the investments doing. we have encountered an unprecedented rapid increase in employer contribution. our current structure provides that the employer takes all of the risk, whether it goes up or down. the employer receives all the benefits. in the early 2000's, the employer did not have to make a contribution to the pension fund, at even as the employee contribution was being maintained as 7.5%. our new model is we share on the
additional payments required. we have a significant matrix -- i do not know if people in the audience can see it -- these materials are available to the public. in july 2013, that is when the city of labor contract expires, and the floating contribution would apply. supervisor elsbernd: let's now runover that point. i think that is a good point. it can impact current contracts? >> i think virtually all of our labor agreements expressly state that employees contributions are at 7.5%. they have to expire in order for us to apply a different number.
so, the majority of those contracts, certainly all miscellaneous contracts, are set to expire in july 2012. police and fire are set to expire in july 200413. -- july 2013. in july, we believe the contribution will likely be between the employer contribution -- it will be between -- it will be between 22 and 22.5%, for an employee he he makes between $50,000.100000 dollars on a pretax basis. employees at -- between $50,000 and $100,000 on a pretax basis.
employees who make less -- as i mentioned, the contracts must expire for this to apply. u c above on the chart be numbers that reflect -- you see above on the chart the numbers that reflect when the rates drop. you go up for more you have a line of zeros, 1.5%, etc., of the existing 7.5% base. what we like about this model, we think it is a sensible for many -- this sensible for many reasons -- defensible for many reasons. supervisor elsbernd: i am getting a look from the city attorney. i do not know how much we can see it or can say.
fair enough. we will leave it at that. >> our proposal reaches back to am pleased to were not members of the empowerment system. we have employees in the california republican retirement system, calpers. the largest group are the deputy sheriffs. they are very similar, identical really, to the police benefits, although it is a different system. additionally, we have a wire for safety officers that have less expenses, and they're also in the public employee retirement system. women to move them into the san francisco -- we wanted to move them into the san francisco
retirement system. this is unique. this does not exist in any form under pers, which is a state program. this charter includes language that either they will move in, or we will have equivalent savings. we feel very comfortable. the recognize that's this -- they recognize that this amendment must address all city employees and we believe it is financially responsible. new employees will be part of the san francisco employees retirement system. historically, there are better returns and better performance, and we think it is in the public's interest to have more people in the system. supervisor elsbernd: they are members of calpers, and so
calpers says to employers all up and down the state, at your contribution for your am -- your contribution for your employee is taxed? >> yes. supervisor elsbernd: most employees have a different rate. >> yes. it is specifically in the 5% range. supervisor elsbernd: if we did not have this language, we would continue to pay the higher toppers employer contribution, but those employees -- the higher calpers employer contribution, but those employees would not have to pay an increased contribution. is that correct? >> that is correct. as we add new hires, the only section that would apply to
people currently retired, they would only be paid when the retirement fund was fully funded. on new businesses -- i understand they are considered that there is some revision or elimination of the cola. it will continue to be so, and that is true for current and city employees who are already retired. in the future -- i was going to sneeze. [laughter] in the future, the supplemental colas will only be paid when the fund is fully funded. supervisor elsbernd: they have achieved the basic cola, and the supplemental will only be paid when the retirement fund is fully funded? >> that is correct. employees will participate in the cost-sharing ".
supervisor elsbernd: just for everyone's benefit, july 1st, all elected officials will be paid anyway, correct? >> this is true. supervisor elsbernd: without the compensatory pay raise that all other city employees receive? >> this is also correct. [laughter] the third leg of this amendment -- would talk about cost sharing for existing city employees, and now we're talking about changes to help care. we believe is necessary to balance health care services. this is a very contentious item. we believe we have achieved a reasonable resolution. the next expiring member of the board would be the member seat, if you will. they would be employed through may ural operations -- excuse me, four and three.
one with certain restrictions so he can be appointed. he would be nominated by the controller, and it would have to be agreed to buy the remaining six members of the board. we met a technical adjustment to the language to make it clear it is not the replacements. supervisor elsbernd: if the three members did not like the nominee from knee controller, it would not be nominated, correct? >> that is correct. which i think puts the -- the individual nominated has to be seen as an expert, fair minded, etc., not carrying any particular vendetta or issue agenda, if you will.
also, the current charter may be misread and we wanted to clarify language referring to any document with any plans provided by the health care system. which we think people understand. the retiree health care trust fund, as we have mentioned before are a very large unfunded liability for retiree health care. as you know, supervisor, proposition b, with a situation where new employees are participating in city matches. that is, we believe, sufficient to cover the cost going forward, and in the same way that we do for pensions and other benefits. and weber, we have very large pension liabilities. we're joined by virtually every
other large public agency. because we are particularly generous program, it is very expensive. we're very happy we have active employees and not those hired since january 2009. all of us will start participate, starting incrementally with a point to 5% contribution, maximizing at 1% over the normal cost, whichever is lower. and that would start june 17. we move that up, because we thought the required employee contribution would drop, which we think is fair. i would note this is particularly important for our bond rating. the city saved a lot of money on capital projects. upon. reporting that as an unfunded
liability has had an unfunded impact. supervisor elsbernd: and we language that makes clear that this number is nearly a -- merely a floor? >> yes, this is true. supervisor elsbernd: right now in the charter, it says 7.5%, but we could potentially go higher? >> yes, yes. this at least will happen, regardless of negotiations. supervisor elsbernd: right. >> retiree health benefit exchanges. there are a relatively small number of employees who have not retired, and between leaving cities service and the present future retiree state -- this clarifies that the coverage they will get will be in effect when they left service, and otherwise it would be a windfall. we believe that is unfair
because we're not reducing the benefit in any way that they had when they left. supervisor elsbernd: the situation as they retired years ago. they show to retire, and lo and behold, they had no idea when they left city service -- they are not going to get that when fall -- windfall? >> this is true. this is particularly in the area of the pending coverage. supervisor elsbernd: the changes we need to adopt today. >> by way of disclosure. i have already mentioned the so- called best thing retirement, which i think is the most significant. -- vesting retirement.
they had 50,100 thousand control points, and we believed those would go up. not to exceed 3.5% a year, but to accord with the cost of living. it has roughly tracked what has happened with wages. these are affected distinctions that now exist. we also reject is so it -- i am trying to find some that are not corrections'. we deleted some language that we determined was not necessary, regarding medicare and retiree health-care.
we believe that was an option to deal with those in light of health care reform. the proposed bargaining units would only become members of the retirement system upon mutual agreement. labour requested language to be more specific on that point. i would say those of the main changes. supervisor elsbernd: the amendment itself. we have a lot of folks to were very interested. is there a way to get that on the website? >> yes. supervisor elsbernd: it is 64 pages? we did not want to print out copies of it. we will make copies of it available on the website, and if anyone wants to e-mail me or the board of supervisors, we will make sure you get a copy. >> we will put it up on the web
site, along with the power point as well. supervisor weiner: -- supervisor elsbernd: thank you. can i ask you to come up? >> thank you. supervisor elsbernd: if you can give us an outline of for the comptroller is. >> sure, supervisor. and the director of the budget for the controller's office. there is a need for a controller's letter. we received actuarial analysis yesterday. we also been in dense. -- we also have amendments.
we need to have more costing available by the next measure. supervisor elsbernd: madam clerk, as i understand it, the chairmwoman has scheduled a special meeting of the rules committee for tuesday at 9:30? >> that is correct. supervisor elsbernd: so this item will be moved to the special meeting, tuesday at 9:30. >> excuse me, supervisor. it is 9:00. supervisor elsbernd: 9:00. are there any other items on the agenda? >> [unintelligible] supervisor elsbernd: we will get another opportunity for members of the public to comment. thank you. a lot of members of the public have been winning a longtime. i would like to read the yellow cards that have been submitted.
if you of not build one now, it would be helpful -- if you have not filled one out, it would be helpful. so, i will read a few names. if you could lineup after i do, that would be helpful. [reading names] please come forward. we will go with the lot minutes for each speaker. >> thank you for hearing us, supervisors. i am employees by the city and county of san francisco. i look fo my retirement soon. i am speaking specifically about the changes in the structure of
the health service board, and my concern is not necessarily we are eliminating one of the elected members in favor of an appointed member, but that the proposal as i understand the change of the majority vote frot really frightens me, because basically you are taking out the checks and balances that should be inherent in this kind of boat and i urge you to change that to maintain the five majority vote instead of the four. thank you. supervisor elsbernd: next speaker, please. >> good afternoon, supervisors. in the executive director of local 21. i co-chaired negotiations with the city on the pension measure. is amazing to me after the
stock-market decline, what wall street it did to public employee pensions and other benefit costs. and never ceases to amaze me. a lot of it is not fair, quite unfair, and there's a lot of political grandstanding around the country around the issue. despite that, there is no denying the downturn has had a negative impact on revenues for local governments and state governments, and certainly for our city. and it has also had an incredible impact on pensions for cities like san francisco. there's just no way of denying that, however unfair some of the politics to run the issue are. it is amazing how well the city functions and how strong it is
financially. it is of equal concern to those of us who are city employees. we may have our differences, but there is no difference that we want as strong and functioning as the service as possible. it is with that spirit that unions after themselves into six months of extraordinarily hard work -- hard work. it is our opinion that is very fair and balanced, fair in terms of how much more the city is going to pay and how much more the city employees are going to be paid -- if i could have a minute? supervisor elsbernd: if you could just tell me how much more fair and balanced this proposal list? >> it is fair and balanced between high paid/low-paid, city employees you have not yet
hired, and active city employees to have retired as we mentioned earlier, and in the future we will all share in the risk. it actually is as i see and experience what is happening in other government jurisdictions. this is an extraordinary document and something we can all be proud of. thank you. supervisor elsbernd: let me read out a few more names. come on, jean. [reading names] >> good afternoon. my names is jean thomas. i have to take exception with the previous speaker. we retirees are not involved in any discussions. this is specifically concerning
the health system board. i would like to point out the three and three you are proposing is not quite as beautiful as you would think because there is another phrase that says "if you cannot agree, then the controller has to have another nominee." all that has to happen is the three people the city designated, the city-appointed seats, the management seats will refuse to speak. so you have a 3 and 3 split on the board and the 30 days goes by, according to what i have read, and then no actions -- there is no actions. the comptroller -- controller's nominee becomes